Genworth posted a net loss of $96 million compared to a net income of $82 million in the preceding quarter, and net income of $42 million in the same quarter of 2010. This was primarily due to ballooning operating losses in its U.S. mortgage segment. The company's total revenue improved to $2.65 billion from $2.41 billion in the year-ago quarter. This much good news was due to growth in net investment income and insurance and investment product fees.
While its retirement and protection and international segments witnessed year-over-year increases of 31% and 2%, respectively, its U.S. mortgage insurance segment more than quadrupled its operating losses. MetLife
The loss in the U.S. mortgage insurance segment was due to $300 million in charges related to reserve strengthening, which in turn was a result of a decline in cure rates for delinquent loans and continued aging trends in the delinquent loan inventory. MGIC Investment
The poor performance of its U.S. mortgage insurance segment has once again weighed down Genworth's profits. Management has therefore decided to eventually split its mortgage insurance business. The revenue from this segment accounts for just 7% of Genworth's total revenue. The decision of splitting this business seems plausible since it will help the company to focus more on core operations and report profits eventually.
The Foolish bottom line
Although hurt by mortgage loss, Genworth still looks better than peers such as Radian Group